Updated: May 21
The Pound has started the day 0.2% up against GBP/USD from yesterday even with optimism fading on the Brexit deal due to the bare-bones nature of the agreement. Since the deal was reached with the EU block the currency has failed to lodge any form of convincing rally against the EUR with the currency settling around the 1.10 mark. Investors are still awaiting news on how services (70% of the UK's economy) will be managed with the break up from the EU. It'll take some major economic or political news to break the currency out of this cycle with pair trading in a very tight range for the last 6 months. This morning is Services PMI day with Germany, France and Italy all releasing their data. Forecast for services is to see a bounce across the block month on month but if this misses target then we could see some positive moves for GBP/EUR today. The UK is also under the services data spotlight with final data being released at 9:30am with expectations being unchanged from previous at 49.9. Money markets have brought forward bets that the Bank of England will be forced to slash borrowing costs again, to 0% in August, leaving open the pathway open for negative interest rates.
Across the pond investors keep a keen eye on the US Senate run-off elections in Georgia. Democrat Raphael Warnock has edged out Georgia Republican Sen. Kelly Loeffler in a closely watched runoff election. Likewise Australia’s ASX 200 index fell 1.12% while Japan’s Nikkei 225 index slipped 0.4%, as the nation lodged a record increase in coronavirus infections. The Hong Kong crackdown also continues with a round of anti Chinese government arrests citing their national security law. This round of arrests included former law makers and an American lawyer. President elect Joe Biden has already come out denouncing the arrests. Bitcoin continued it's momentum to surpass the 35,000 USD mark before settling around the 34,500 USD price that we see now.
Have a good day!
Funding Routes Team